GST Reverse Charge Mechanism Deferred Till Sept. 30

The government has kept in abeyance the Goods and Services Tax provisions relating to reverse charge mechanism for another three months till the end of September.

In a notification, the Central Board of Indirect Taxes and Customs said the provision of reverse charge mechanism will remain suspended till Sept. 30, as against the earlier date of June 30.

Under the reverse charge mechanism, registered dealers are required to make tax payments in case they procure goods from unregistered businesses.

A ministerial panel under Bihar Deputy Chief Minister Sushil Modi was constituted in March to iron out issues being faced by businesses under the reverse charge mechanism.

Deloitte India Partner M S Mani said the extension indicates that the government has been sensitive to feedback on reducing the goods and service tax complexities. “Since the extension is only being given three months at a time, it signifies that the same may be re-introduced as one more anti-evasion measure if the GST collections do not meet targets,” Mani said.

EY Partner Abhishek Jain said this extension was much sought after as the industry genuinely wanted some time before adhering to additional compliance envisaged for such procurement.